Correlation Between Bhakti Multi and Ashmore Asset

Can any of the company-specific risk be diversified away by investing in both Bhakti Multi and Ashmore Asset at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bhakti Multi and Ashmore Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhakti Multi Artha and Ashmore Asset Management, you can compare the effects of market volatilities on Bhakti Multi and Ashmore Asset and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bhakti Multi with a short position of Ashmore Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhakti Multi and Ashmore Asset.

Diversification Opportunities for Bhakti Multi and Ashmore Asset

0.2

Correlation Coefficient

Bhakti Multi  Ashmore Asset

Modest diversification

The 3 months correlation between Bhakti and Ashmore is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bhakti Multi Artha and Ashmore Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ashmore Asset Management and Bhakti Multi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bhakti Multi Artha are associated (or correlated) with Ashmore Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ashmore Asset Management has no effect on the direction of Bhakti Multi i.e., Bhakti Multi and Ashmore Asset go up and down completely randomly.

Pair Corralation between Bhakti Multi and Ashmore Asset

Assuming the 90 days trading horizon Bhakti Multi Artha is expected to under-perform the Ashmore Asset. But the stock apears to be less risky and, when comparing its historical volatility, Bhakti Multi Artha is 2.78 times less risky than Ashmore Asset. The stock trades about -0.15 of its potential returns per unit of risk. The Ashmore Asset Management is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  65,176  in Ashmore Asset Management on September 3, 2024 and sell it today you would earn a total of  4,824  from holding Ashmore Asset Management or generate 7.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bhakti Multi Artha  vs.  Ashmore Asset Management

Bhakti Multi Artha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bhakti Multi Artha has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ashmore Asset Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ashmore Asset Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Ashmore Asset may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bhakti Multi and Ashmore Asset

The main advantage of trading using opposite Bhakti Multi and Ashmore Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bhakti Multi position performs unexpectedly, Ashmore Asset can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ashmore Asset will offset losses from the drop in Ashmore Asset's long position.

The idea behind Bhakti Multi Artha and Ashmore Asset Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.